Thursday, 19 February 2015

Making the polluter pay

Last weekend, I took part in a march as part of the Climate Coalition's "For the love of" campaign. The purpose of this campaign is to raise awareness of climate change, and all the broad range of things that it threatens. And as well as recognising the hugeness of that, also acknowledging the positive feeling in appreciating the things that we love. For me, it was animals that I love most and dearly want to protect.

We also did a joint action with Fossil Free Cambridgeshire, who are calling for divestment from all fossil fuels, which seems sensible if we want to avoid global warming of 2% more than pre-industrial levels. Transition wants to help build a world where oil is left in the ground and people live simple, happy lives with renewable energy, but at the moment there is nothing much incentivising this other than generosity or a clear-headed concern for the safety of people who will grow up in the 21st century.

It is the most pernicious form of the Tragedy of the Commons. It's unreasonable to expect everyone to cut their own emissions and other forms of damage that they do to the climate while trying to live a happy, ordinary life. It's the kind of thing that requires cooperation on a huge scale, very quickly, and in the absence of any actor who is willing and able to implement it, the governments are in the awkward position of needing to do so. Not a social contract, but an ecological contract.

Agreeing the need to do so, and establishing global consensus is just the first step. Fortunately most political parties in the UK are slowly coming around to this idea, but there is then the challenge of getting individuals and businesses to play their part without running them into the ground. It's not hard to live a low-carbon lifestyle, and it's not hard to find business sectors that are similarly benign, it's partly a question of how much you've invested in oil already. Some people will want to go on using fossil fuels and releasing carbon emissions, even if it costs more than it used to. And a good policy to limit climate change should help to balance this.

EU ETS is what we currently have, a European trading scheme for emissions that covers a market worth tens of billions of euros every year. This has been in place since 2005 and uses the "cap and trade" approach - each player has a cap to the amount of greenhouse gasses that it can emit, and if it manages to avoid going over the cap then it is free to trade the excess allowances for cash. A sound idea in principle, but it has three big problems that I'm aware of:

  - It does't bring ordinary people to the table. Although it's true that only 90 companies are responsible for two thirds of man-made climate change, they have customers who stimulate that demand. The responsibility for, or the invitation to, contribute to the solution needs to be extended to consumers as well as industry.
  - It isn't reducing overall emission by a great enough factor. The rate at which emissions are capped is only 1.74% per year, which is nowhere near on target for the change needed. If this was working, the prices would be going steadily upwards and the emissions would be going steadily downwards, but it has been notable more for instability than progress.
  - It's very complicated, which makes it nearly impenetrable. The rules are very convoluted, have already changed many times and adopted various instruments for price correction and international exchange, within only ten years of operation. The fiddly rules still don't cover all the broken bits, like the grandfathering system which encourages companies to use inflate their carbon emissions so that they qualify for more allowances in later years.

Another idea that has been put forward, and has some grass roots support in the USA, is Fee and Dividend. The big difference with this scheme is that instead of being allocate permission to create carbon emissions, those responsibly will pay directly instead. This is a harsher system which affects the bottom line of big industry polluters directly. And instead of the proceeds being used by the state (which ordinary people have very little control over) there is a dividend which is sent to every adult in the form of a cheque. This approach, of staying "revenue neutral", makes the government more of a bystander in the system and allows the people who are hurt by it to be compensated by those who cause it.

Again, this sounds like a good idea, but there still is little incentive for people to change their ways and get to grips with the way their lifestyles affect the climate. It is doesn't offer a transition as we understand it, but a world where the current generation are able to pass the cost of carbon on to future generations. Someone receiving a Fee and Dividend cheque in the post may well say "There they go again, burning loads of coal, but at least my disposable income has gone up which will help take my mind off it."

The other candidate for solving this problem is Tradable Energy Quotas (TEQs) which is a form of Personal Carbon Trading. The principle behind these is that allowances for energy use are put into circulation amongst individuals and businesses, and the pool of available allowances is drawn tighter on a yearly basis. An individual who cuts down his own use of energy, by making a personal transition in their own lifestyle, is then able to sell their spare TEQs using a system similar to an Oyster-card, so that businesses can purchase them at the going rate. This allows a definite reduction in emissions to be enforced and quite transparently for all involved. But more importantly, it engages everyone deeply in the effort. That's probably why Rob Hopkins said in an interview that if he became Prime Minister, implementing TEQs would be his first act.

Dr. Michael Grubb, the author of "Planetary economics", will give a talk next week on this topic, and answer some questions from the audience which is bound to be interesting.

Another perspective comes from Kevin Anderson, ex-director of the Tyndall Centre, who suggests that carbon prices are not able to achieve the intended goal at all. He does see Personal Carbon Trading as part of the solution, but a much more comprehensive and radical solution including a moratorium on airport expansions.

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